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Our Etsy shop is now charging VAT to EU customers – #EUVAT Update

July 23, 2015 by Faffy Tea

For anyone following the ‪#‎EUVAT‬ saga, Etsy have finally changed their checkout system to include a solution for collecting VAT for EU customers buying instant downloads like those in the Faffy Tea shop.

Etsy Shop now charging VAT

However if you’re in the EU, this will mean that our prices on Etsy have increased to include VAT. It will not affect our customers in the US, Canada, Australia etc.

For some background information, an EU ruling came into effect in January, stating that VAT should be charged on all digital goods and products sold to EU consumers at the VAT rate of the buyer’s country (not ours in the UK), and that most significantly unlike physical products there is no profit threshold before a business has to charge it. They have to charge it on their very first sale. Because of the complexities of this for tiny businesses, the UK government ruled that as a marketplace, Etsy should be collecting and dealing with this VAT (not the sellers). We have been waiting patiently for them to implement this into the Etsy checkout system which they have just done overnight. Etsy display prices including VAT differently for each logged in member from the EU, and then the tax gets collected from the purchase and paid directly to your country’s revenue service (we get no extra money).

So from today, if you are logged in to Etsy from the UK, Ireland or another EU country, you will notice that all of our products are more expensive as the price now includes your country’s VAT added to the price.

We are really sorry about this, it is EU law, and we hope that an extra few pennies won’t put you off buying from us.

Meanwhile, action groups are still lobbying for tiny businesses like ours to have a small profit threshold before having to charge VAT – just like all other businesses selling physical products and those selling business-to-business. Please sign the petition at chn.ge/1FbLOej. We’ll keep you updated!

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